By Anita Campbell (www.smallbiztrends.com)
We can all benefit from good advice, and that makes advisory boards a hot topic for the savvy CEO and business owner.
In recent years, advisory boards have become an increasingly popular tool for endeavors ranging from Fortune 100 companies to one-person shops. That’s because a Board of Advisors can do more to make your business grow than any other comparable expenditure.
So here’s some advice: set up your own Advisory Board, and here are seven great reasons to do it today.
SEVEN GREAT REASONS TO HAVE AN ADVISORY BOARD:
1. EXPERTISE YOU CAN’T BUY: Advisory Board members typically bring a combination of skill sets that are totally out of reach for most small businesses.
Take the example of an Advisory Board for a $2 Million technology company. The member-advisors are:
- The finance manager of one of the largest privately held companies in the US
- The CTO of a middle market technology company
- A business consultant with CEO and Fortune 500 experience
- A university professor
- The retired CEO of a manufacturing company
Imagine what it would cost to hire this level of skill, experience, and knowledge. A carefully chosen Advisory Board can give you access to such people for a tiny fraction of that cost. In many instances, the only expense comes from convening meetings.
However, you don’t have to wait for a meeting. When you have an Advisory Board, good advice is just a phone call or email away.
2. BUSINESS CONTACTS WHEN YOU NEED THEM: Choose Advisory Board members with diverse backgrounds, and their Rolodexes will become one of your most valuable assets.
Sometimes a brief introduction by an Advisor is all it takes to open doors that you thought were closed””or that you never knew existed. Advisory Board members are sincerely interested in a business’s success. They want to introduce you to anyone they feel might help grow your business.
Looking for potential customers, sympathetic bankers, well-heeled investors, or even a talented new employee? Your Advisory Board can be a key source.
3. THE BENEFITS OF A BOARD OF DIRECTORS WITHOUT THE HASSLES: Some business owners equate an Advisory Board with a Board of Directors. Yet, the two are very different.
An Advisory Board is exactly what the name suggests: it is there simply to advise. This means you reap the benefits of your advisors, without all the formalities and expense of a Board of Directors.
An Advisory Board is simpler than a Board of Directors. It is also less intrusive and does not require you to give up any control.
- Advisory Board members have no formal authority or power within your company, unlike Directors.
- An Advisory Board does not have the same legal responsibilities (fiduciary duties) as a Board of Directors. That means you won’t need to pay the high fees and provide Directors Insurance coverage to protect them from liability exposure.
- You need not reveal your business’s most intimate financial details to Advisory Board members. Unlike with Directors, it’s your choice how much information to share with Advisors.
- You need not observe legal formalities for meetings””voting, quorums, etc. With a Board of Directors, such legalities are mandatory.
All in all, an Advisory Board gives you the best of both worlds. Its years of experience and high caliber advice increase your credibility both in the marketplace and with potential investors. And this all comes without the expense, intrusiveness, and formality of a Board of Directors.
4. SIMPLE AND INEXPENSIVE TO SET UP AND OPERATE: Advisory Boards are relatively simple and inexpensive to set up.
They can be as informal as a breakfast meeting twice a year. Or they can be slightly more structured, with regular working meetings once a quarter complete with agendas. The level of formality is a matter of business culture and approach. However, some rudimentary structure can help you get the most out of your Advisors:
- Advisors who regularly receive basic information about your business in an organized way gain a clearer picture of it. Providing them with market and strategic information helps frame issues and promote productive sessions.
- Advisors who have a clear understanding of their roles are better equipped to meet your expectations. Don’t just assume your Advisory Board knows what you expect. Take the time to discuss the Board’s role during the first meeting, or even prepare a simple mission and bylaws. It makes your Advisory Board more effective.
What are the costs? Advisory Boards can be free or fee-based, depending on the resources available to you. However, even if your Advisory Board members are friends or acquaintances who are willing to serve without charge, it is customary to reimburse them for long distance travel or out-of-pocket expenses they incur on the business’s behalf. At the very least, expect to foot the bill for complimentary breakfasts and lunches.
5. GROW YOUR BUSINESS FASTER: An Advisory Board is a great way to signal to the world your intent to grow your business. Few actions say as much about your commitment. Only companies that are serious about growth take the time and effort to organize an Advisory Board.
When assembling your Board, pick Advisors who can help you develop growth strategies. Individuals whose judgment you respect and who have strategic thinking ability are what you need on an Advisory Board. Make sure they know that you are seeking their help in order to expand and broaden the business’s future.
6. A PERSONAL SOUNDING BOARD: Advisory Boards can serve as a sounding board for fleshing out new ideas or solving weighty problems. An Advisory Board member can provide an invaluable service simply by being a willing, informed listener when you need to talk through an idea or a problem. Sometimes simply being able to verbalize an issue to someone you trust and whose judgment you respect is all it takes.
Your Advisors may well have dealt with the same issues in the past. They may be able to lead you to creative solutions so simple that you’ve overlooked them. Very likely they’ve “been there, done that.” You can gain the benefit of their hard learned lessons without having to go through the same pain yourself. Or they may be able to firm up that great new idea you’ve been chewing on for months, and then help you turn it into action.
7. MENTORING: Let’s face it: The top is a lonely place. Business owners, CEOs and other executives often have few ways to get support and guidance. Your employees expect you to have all the answers. But to whom do you turn when you need help with those answers? That’s where an Advisory Board can make all the difference.
Think of your Advisors as mentors. Mentors help coach you to become a more effective leader. They inspire you to greater leadership heights through their own positive examples. They help you get through the tough times. They support and encourage.
Interacting with you, Advisors observe your leadership style. They come to see your strengths perhaps more clearly than you do. They also learn about the kinds of situations that can challenge you, and through coaching can help you overcome them. Advisors can bring out the best in you.
The mentoring experience can be extremely rewarding for the mentored as well as the mentor. It can lead to personal growth and development for both. And that, while it may not be your goal in setting up your Advisory Board, can be one of its greatest long-term benefits.
Anita Campbell is an Entrepreneur, Mentor and Consultant. Her firm, Anita Campbell Associates Ltd., specializes in helping technology and service sector businesses grow. When not working she can often be found in her Japanese garden.